Industry Eye: It pays to make sure you get the best possible terms when making plans for a wind farm on your land

You may have seen the press reports, the maps of the offshore wind farm development zones and heard the projections of the Humber becoming the hub for offshore wind and Hull the new ‘Aberdeen’ of offshore wind.

This massive investment will generate serious regional benefits but also make a major contribution to the UK’s target of sourcing 15 per cent of its energy from renewable sources by 2020.

However, all this development news is not detracting from or lessening the continuing commercial and governmental encouragement for the roll-out of onshore wind farms.

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These continue to offer lucrative diversification opportunities for landowners.

You may have been contacted by a developer or its agent. It will be the developer which will incur the time and expense of carrying out the feasibility studies, investigations and planning applications for a scheme. The developer will have discussed with you how it proposes to develop the wind farm and what payments it would make to you if the scheme were to be successful.

It may have requested you enter into an exclusivity agreement under which it has an exclusive right for a period of years to carry out initial testing. My advice to landowners is to sign no document, however informal it looks, before taking professional advice.

You need to be certain that what is proposed represents the best possible terms which could be obtained by you were you to have actively marketed your holding as a site for a possible scheme.

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Any scheme will include an option and lease and you need expert advice on all the issues to be covered by each document proposed by the developer including:

n payments to you during the exclusivity period, option and lease;

n implications on your continuing farming operations;

n the rights to be granted to the developer during the option and lease to carry out investigations, construct, operate and service the wind farm.

The issue of payments will be of crucial importance to you. The payments to be payable to you if the scheme is successful should only be agreed by you in liaison with your own professional advisers.

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There is no standard rate – terms agreed are always distinct and specific to the individual project. The developer is interested in paying no more than the minimum. Payment schemes may be referenced to megawatts generated, a percentage of value of electricity generated, fixed sums by reference to numbers of turbines or a range of alternatives. You need input on each proposal from your own professional team.

Developers tend to have their own standard exclusivity, option and lease agreements. You need expert advice not only on the commercial terms proposed by the developer but also on the broader contents of each agreement – and confirmation that any professional fees incurred in taking advice on the documents will be paid by the developer whether or not the transaction proceeds.

n Stephen Unwin is a real estate partner and a member of the renewable energy group at law firm Andrew Jackson. Tel: 01482 325242, email stephen.unwin@andrewjackson. co.uk or visit www.andrewjackson.co.uk

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